FINC 330 Week 2 Homework
Solution
The Hamptons Home of a Famed
Socialite Hits the Market
“Before there was
Paris Hilton, there was Consuelo Vanderbilt Balsan – a Gilded Age heiress and
socialite, re-nowned for her beauty and wealth. Now Ms. Balsan’s onetime
Hamptons home is slated to hit the market priced at $28 million with Tim Davis
of the Corcoran Group.
Located on Ox Pasture
Road in Southampton, the shingle-style home was built around 1900 and is known
as “Gardenside” or “Cara-Mia”. Ms. Balsan, the great-granddaughter of railroad
magnate Cornelius Vanderbilt, owned the house until her death in 1964.
According to public
records, the estate is owned by Robert G. Goldstein, executive vice president
and president of global gaming operations at Las Vegas Sands Corp, and his wife
Sheryl, who purchased the house in 2007 for $17.4 million.” (The Wall Street
Journal, August 1, 2014, M2)
·
Calculate the annual
compound growth rate of the house price during the period when the house was
owned by Robert G. Goldstein (since 2007). (Round the number of years to the whole
number). Please show your work.
·
Assume that the growth
rate you calculated in question #1 remains the same for the next 20 years.
Calculate the price of the house in 20 years.Please show your work.
·
Assume the growth rate
that you calculated in #1 prevailed since 1900. Calculate the price of the
house in 1900.Please show your work.
·
Assume the growth rate
that you calculated in #1 prevailed since 1900. Which price was paid for the
house in 1964?Please show your work.
5 You were using the
time value of money concept to answer the question #3. Think about the time
line for that problem. What is the time point 0 in that problem? Please explain your answer.
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